![]() If your employer reimbursed and didn't include in your income, that would be a tax savings. You are limited to a deduction of 50%, whereas your lump sum may include 100% of it as income. If you pay independent contractors, you may have to file Form 1099-NEC, Nonemployee Compensation, to report payments for services performed for your trade or business. The only possible drawback is meals and entertainment. Reporting Payments to Independent Contractors. That puts the expense on their return, not yours.Īs long as the reimbursement isn't an awkwardly large amount, I wouldn't worry about the 1099 being a lump sum. With this approach, the company deducts the expenses in the appropriate categories on its return, and does not report the reimbursement to you. It is up to you to itemize the expenses on your tax return.Īlternatively, the company could have set up an accountable plan with you. The company is not treating any of these payments to you as reimbursements of valid expenses. A 1099 form is a tax form that a business is required to issue to contractors and self-employed individuals who complete more than 600 worth of work for the business in a year. You used this income to then pay expenses. Currently payments representing only reimbursements of documented travel expenses (receipts required) are not subject to IRS 1099 or 1042-S information. If its on the 1099MISC, you essentially received income. Form 1099 is a tax information return that reports income received outside of wages, salaries and tips. If the 1099MISC you receive from this company reflects your reimbursements, then you deduct them. ![]()
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